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Insurance payouts not enough to cover riot damage

Most insurance policy reimbursements hover between $25,000 and $50,000, but contractors have consistently been sending in bids that range from $200,000 to $300,000.


It was just one day after rioters ravaged parts of St. Paul, Minnesota that construction crews were hired by the city to demolish the Sports Dome retail complex due to the building's instability, the Star Tribune reported.

It was only after this had happened that the property owners were charged $140,000 in order to have the debris carried off the premises.

"We were really upset about that," Jay Kim, property owner of the Sports Dome, said, whose insurance policy only manages to cover a maximum of $25,000. "We thought that was high. But we didn't know how much demolition would cost at the time."

Most insurance policy reimbursements hover between $25,000 and $50,000, but contractors have consistently been sending in bids that range from $200,000 to $300,000. The Tribune reported that the cost of removing the materials is in many cases more than the property value.

Contractors are well aware that prices for riot-related work tend to be "far higher" than usual, but added that "is because government regulations require them to treat all debris from a burned-out building as hazardous." This has the potential to double the price of debris removal.

"I think that is price-gouging and they should contact the attorney general," Andrea Jenkins, vice president of the Minneapolis City Council, said. "That is a symbol of capitalism run amok."

The CEO of Rachel Contracting pushed back against this, saying that "we aren't taking advantage of anybody," noting that "some people might have sticker shock, how do they know? Most of these folks have never had to wreck a building."

The high prices for debris removal has jammed the gears of rebuilding projects starting back up, with the remains of scorched buildings taking months to clear out. This raises questions about the likelihood that others will want to reinvest in the area.

A number of property owners are pleading with city officials to take the lead with contractors by having them combine their projects and seeking "public bids for the work." Some have suggested this is the only way to ensure that contractors will not exploit inexperienced property owners.

"There is power in numbers. If I were the mayor, I would start thinking collectively about how we can help," Kelly Drummer, president of MIGIZI Communications, said. MIGIZI Communications was destroyed in the riots.

St. Paul officials have, in response, coordinated a few demolition projects, including Kim's Sports Dome. Kim said that he was grateful to accept the $140,000 bid, seeing that other companies were bidding as high as $285,000.

The Tribune reported that Minneapolis is considering making the same moves. "We understand there is a role for the city to make this happen," Steve Poor, Minneapolis' director of development services, said. "The mayor told us to go and see what you can do. We are looking at what is possible."

There has been a defense of rioting and arson from many that have stated that since insurance would cover the damage, no one is actually hurt by the property damage. Early from Minneapolis, the first American city to go up in flames after the death of George Floyd, indicate that the costs far exceed the insurance coverage.

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